Jrbarnes

Peak Oil: Caused by Geology, Politics or Infrastructure Issues?

It has been over 20 years since the world has found as much oil in a year as it has used in that year. Tat is not a sustainable situation. Much of the technological developments have enabled the oil to be drawn out of the ground faster, which has enabl us to barely keep up with demand. Another factor which Bruce Pile referred to above, is Net Energy. How much energy does it take to produce the energy providing substance. In the early days of the oil business, the energy in one barrrel of oil would enable the production of up to 100 barrels of oil. Now it runs about 1 to 3. The energy required to produce a gallon of ethanol is as much or more than gallon of ethanol produces. Subsidy or no, that is not a sustainable situation. The production of energy neeeds to be looked at as not just monetary ecnomics, but in terms of energy economics. What is the energy profit (or loss) from the method. Currently most of the alternative methods do not produce energy protfits, and some produce energy losses by the time they are at the end user.

Will Goldman Sachs 'Trade Places' with the Hunt Brothers?

The Wall Street Big Boys were caught in the Hunt's cornering of the market trap and could not acquire the silver to meet their sales commitments that the Hunt's had acquired, and were thus positioned to lose immense amounts of money. The CBOT and the CFTC again looked after their own, and changed the rules to let Wall Street out of the trap. Given the history, it is doubtful that the regulators will take any action that might be harmful to Goldman.

Why It's Crucial to Reduce Leverage in Oil

I am in the oil business, and when I hedge, I do not take possession of the oil that I do a futures contract on, nor do I ship my production to Cushing, Oklahoma where contracted oil is stored, nor do other oil companies that I know. If my oil does not sell for the price that I hedge it for, I sell it at market where it is, and make up the difference with the profit or loss from my hedge that month, with the net result being that I net the price that I hedged, thus keeping my bank happy. Similarly the buyer of oil who hedges, does not normally take possession of the oil in Cushing, but buys it in the normal course of his business, using the profit or loss on his hedge to end up with the net price hedged.

Oil and Gas Prices Should Fall, For Now

Ouside of the eastern big cities, where much of their development was before the big boom in auto ownership, cities were contructed for the automobile, not mass transit. As a result, mass transit does not work for most of the population.

Oil Prices and Political Energy

$260 billion of commodities represents only 3 weeks of world oil sales. Not enough to materially move the market. If ANWR and offshore Florida were currently prodcing their combined 1 million barrels per day each, and they would be if they had not been prohibited 10 years ago, the price of oil would be materially affected. They will make a similar difference 10 years from now, if permitted. Price is set at the margin. An extra 2 million barrels per day of secure oil supply would provide a margin that would bring down price. As to the environmentalists rage against the impact of offshore drilling, Rita and Katrina hit the Gulf oil industry about as hard is it is possible to hit it, even turning some offshore rigs upside down. No oil spills in spite of that.